November 20, 2025 – As of 1:30 PM ET – Folks, I’ve been doing this a long time and I’ve rarely seen a market flip that fast without a war, a bankruptcy, or a surprise rate hike. This morning the S&P 500 ETF (SPY) gapped up almost a full percent, everyone was feeling good after Nvidia’s monster earnings last night, and then… boom. One Fed governor opens her mouth and the whole tape falls apart.
SPY went from roughly $673 to $652 in about two hours. That’s a $21 drop on the most widely-traded stock fund in the world. Twenty-one bucks while most people were still sipping their second cup of coffee!
What Actually Happened?
Federal Reserve Governor Lisa Cook gave a scheduled speech at 10:00 AM ET on financial stability, highlighting risks in the current environment. She didn’t pull punches, pointing out that stocks, houses, corporate debt, and even hedge fund activities in the Treasury market are looking pretty stretched. She flagged the potential for sharp market declines if things get too frothy, and threw in some notes on how AI could either help or add more volatility down the road.
She didn’t raise rates. She didn’t even hint at raising rates. She just told the truth out loud: valuations are stretched. The algos heard those warnings and hit the sell button like it was Black Friday at Best Buy. Two hours later we’re down 3.2% from the morning high and the VIX (the fear gauge) is up 18% on the day.
Self-Fulfilling Prophecy? You Betcha
Here’s the crazy part – the Fed is supposed to calm markets, not light the fuse. But when a sitting governor talks openly about downside risks on a quiet Wednesday morning, traders don’t wait around to see if she’s right. They sell first and ask questions later. It’s the ultimate “the Fed put their own foot on the gas pedal of panic.”
We’ve Seen This Movie Before
Remember February 2018? Jerome Powell’s very first speech as brand-new Fed Chair – he said the word “strong” one too many times about the economy and the market decided that meant faster rate hikes. Result? The VIX exploded from 13 to 50 in four days and SPY dropped 12% in a week.
Or December 2018 when Powell said rates were “a long way from neutral” – market lost 19% in three weeks.
Even smaller names get crushed on similar headlines. Back in 2022 when another Fed official talked about “financial conditions needing to tighten further,” Tesla (TSLA) dropped 12% in a single session, Coinbase (COIN) fell 15%, and Bitcoin (BTC) dumped from $23K to $20K overnight.
Point is: when someone wearing a Fed badge says anything that even smells like “things are too frothy,” the reaction is swift and unforgiving.
What Happens Next?
As of this writing, SPY is sitting right on its 50-day moving average around $668–$670. Nvidia already reported a blowout quarter last night, so the fundamentals didn’t change in the last four hours. This feels a lot more like a sentiment washout than the start of a bear market.
That said, if we close below that 50-day line today, the chart guys will pile on and we could easily see another 3-5% downside in the coming sessions. On the flip side, dip-buyers love these oversold conditions – especially with Thanksgiving next week and year-end rally hopes still alive.
The Big Lesson for Regular Investors
Markets can turn on a dime based on one sentence from one person. That’s both the risk and the opportunity. The good news? These headline-driven selloffs often create some of the best buying opportunities of the year – if you’ve got cash and a cool head.
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Stay nimble out there, folks. The market doesn’t care what you had for breakfast – it only cares about the next headline.